A source close to the firm, Chicago's largest private-equity shop, said its institutional investors wanted it to focus on investing the $4 billion already raised, increasing the odds of snapping up bargains before sale prices rebound during a recovering economy.

Fundraising has been slower than expected because of the slack economy, the credit crunch and a pullback in pension fund investments.

The target for the new fund, Madison Dearborn's sixth, remains higher than the $6.5 billion raised for its last fund, in 2006.

Madison Dearborn's investors, which include the government of Singapore and endowments at Yale and Harvard universities, have signaled that the next wave of investing won't occur until late this year or early next year, according to a person familiar with the matter.